Bank of America, Bain Said to Weigh Bids for Popular Assets

Updated on
  • Popular said to eye 1 billion euro, non-performing asset sale
  • Lender seeks to accelerate process to clean up balance sheet

Bank of America Corp. and Bain Capital’s credit investment arm are considering bids for about 1 billion euros ($1.06 billion) of non-performing assets from Banco Popular Espanol SA as the Spanish lender accelerates efforts to clean up its balance sheet, according to people with knowledge of the matter.

Negotiations are ongoing, and an agreement may be reached in the coming weeks, the people said, asking not to be identified because the deliberations are private. No final decision has been made and Bank of America and Bain may still decide against a bid, the people said.

Representatives for Popular, Bank of America and Bain declined to comment.

Popular shares rose 2.9 percent to 88 euro cents at 11:08 a.m. in Madrid. The stock has declined 68 percent this year.

It wouldn’t be Bain’s first credit deal in Spain. Last year, the company’s credit business acquired a portfolio of secured loans from BFA-Bankia Group valued at about 560 million euros. The portfolio was made up of defaulted Spanish loans to real-estate developers and small-to-medium-sized companies, secured mostly with real-estate collateral.

The potential sale is in addition Popular’s plan to move 6 billion euros of real-estate assets into a new company by early next year as it works to overcome the legacy of Spain’s property crash and the impact of ultra-low interest rates.

Still, the bank is struggling to achieve the financial terms it set for the spin off, three people familiar with the matter said last week. Its advisers are having trouble finalizing financing with potential lenders and some global investment banks have declined to participate, they said. For its part, Popular said the process is in its final stages and will be completed during the first quarter of next year as planned.

Popular sold more than 1.5 billion euros of real estate in the first nine months of the year, the company said in its third-quarter financial report.

— With assistance by Sarah Syed, and Sharon R Smyth

(Updates with share price in fourth paragraph.)
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